Controller Finds “Reckless Spending” in South El Monte

Updated: May 22, 2018

State Controller Betty Yee announced May 25 that her team’s review of the city of South El Monte’s administrative and accounting practices found “prevalent and severe deficiencies, with 88 percent of internal control elements deemed inadequate.”

“South El Monte officials demonstrated a culture of incompetence and blatant disregard for accountability of taxpayer dollars,” Controller Yee said. “I am especially concerned with their exorbitant lobbying and consulting expenses that resulted in undefined benefits to the city and its residents.”

In August, the controller announced that her team would review the city’s finances over two fiscal years. The city, home to more than 20,000 people, is located in the San Gabriel Valley region of Los Angeles County. South El Monte spans 2.8 square miles, of which just 26 percent is residential.

The Los Angeles County Board of Supervisors and members of the South El Monte City Council requested the review following a corruption scandal. Mayor Luis Aguinaga resigned in August and pled guilty to bribery charges. The former city manager, Anthony Ybarra, and the former finance director, Joe Nocella, also resigned in the wake of the scandal.

Among the review’s findings:

  • South El Monte had no policies for city-issued credit cards and business-related travel. City employees and city council members spent nearly $290,000 on credit cards from July 2012 to September 2016. Credit cards paid for consultants’ bar tabs, airfare, staff lunches, and expensive electronics.

  • Council members purchased laptop computers, phones, televisions and tablets without purchase orders, and without including the equipment in the city’s inventory.

  • The former city manager charged more than $3,000 to a cheerleading camp with no supporting documentation.

  • The city paid a consultant $390,000 after the contract expired and overpaid another contractor more than $69,000.

  • The city has paid more than $1.4 million to several lobbying and consulting firms to advocate for its preferred Metro Line route, without any public discussion of the project or related expenses.

Overall, 69 of 78 internal control elements were inadequate. The city had incomplete and outdated policies, ignored administrative procedures, and possibly violated the city’s municipal code.

The city documented many corrective actions it has taken or plans to take in response to the controller’s review.

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